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'Almost everyone gets a benefit' with the new Child Tax Credit of up to $3,600: Here's how and when parents will get payments

Many families can receive up to $3,600 per child thanks to new changes to the Child Tax Credit.

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Monthly payments of the new expanded Child Tax Credit begin hitting parents' bank accounts this week, on July 15.

The American Rescue Plan institutes a fully refundable Child Tax Credit for 2021, increasing the maximum amount eligible parents can receive for simply having a qualifying child dependent to $3,000 per child ages 6 to 17 per year, or $250 per month. For children under the age of 6, the maximum credit equals $3,600 annually, or $300 per month.

The dramatic expansion of the credit would only last for one year under the American Rescue Plan, although Democrats are hoping to make the credit enhancement permanent.

The credit's overhaul will deliver cash to 93% of American children and cut the child poverty rate by half, according to Columbia University.

Here's what we know about how, and how often, the government is sending aid to parents under the bill.

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Checks will be based on income

The amount of money Americans stand to receive as a Child Tax Credit will be based on their adjusted gross income. In other years, the Child Tax Credit has required parents have an annual income of at least $2,500 to qualify, but the expanded version for 2021 has no minimum income requirement.

Check out Grow's calculator to determine how much you could be eligible to receive.

The enhanced tax break would begin to phase out at adjusted gross incomes of $75,000 for individual taxpayers, $112,500 for head-of-household filers, and $150,000 on joint returns. Under the proposal, the IRS would look to the 2020 return to determine eligibility for the credit. If a 2020 return has not yet been filed, the IRS would look to 2019 returns. 

If you earn more than that, you would be eligible for a reduced payment. Wealthier families who may not qualify for the enhanced credit in 2021 can still claim the previous credit of up to $2,000 per child, which begins to phase out at $200,000 in income for a single or head-of-household filers and at $400,000 for married couples filing jointly.

To give you a better idea of how much families stand to receive from the potential credit enhancement, here's an example. A two-parent family with three children ages 11, 7, and 4 and a household income of $150,000 could get $800 per month from the IRS from July through December for a total of $4,800. Once they file their 2021 tax return next year, they could claim the remaining $4,800 in child tax credits.

The new Child Tax Credit is likely to have a widespread impact, says Elaine Maag, a principal research associate at the Urban-Brookings Tax Policy Center: "Almost everyone gets a benefit with the increased tax credit."

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CTC payments start going out in July

The American Rescue Plan allows for up to half the credit to be paid out in advance, with the remainder claimable when you file your taxes next spring.

From July to December, the monthly benefit will be directly deposited into most family's bank accounts on or around the 15th of every month, "without any further action required," the Treasury Department and the IRS said in a statement this spring. After the first benefit in mid July, the IRS says families can expect subsequent payments on Aug.13, Sept. 15, Oct.15, Nov. 15, and Dec. 15.

Parents who don't want a monthly check will have the option to opt out of payments and instead take a lump sum when they file their taxes next year. Families can opt out online using the IRS Child Tax Credit Update Portal, or by using paper forms.

As of July 15, families can make changes that would affect their August payment, including unenrolling or providing or updating bank account direct deposit information. It's too late to opt out of the July payment.

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The IRS portal allows taxpayers to update their income, marital status, and number of children who qualify for the credit. To receive your benefits ASAP and get the full value of the credit, Maag suggests that you make sure the IRS has your latest information on file, including the number of dependents you have.

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